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"Historic"... "One of the worlds largest natural gas deposits".... "Will change the face of Israel's economy"..."Inconceivably huge quantities... Solution for the future generations." Israel has stumbled upon a huge natural gas deposit about 90 kilometers off of its shore in the Eastern Mediterranean. Initial conservative estimates put the find at the very least at 27 billion dollars and capable of meeting all of Israel's natural gas needs for decades. But it looks like it may turn out to be much, much more substantial than that, both in terms of the size of the find and the long term impact.
I tend to downplay comments of Yitzhak Tshuva, the very talented owner of the Delek Corporation and partner in the drilling venture. Tshuva has billions in debt, mostly from shaky real estate ventures as a result of the global economic downturn. He is interested in reassuring bond holders that he can pay them back and hyping a promising natural gas discovery is a good way to regain shaken investor confidence. On the other hand, Nobel Energy, a well respected American energy company and the primary party to this discovery delivered a measured, understated announcement that hints at the significance of the find:
"We are extremely excited by the results. This is one of the most significant prospects that we have ever tested and appears to be the largest discovery in the company's history. Early indications are that the resources identified are very substantial, at least equal to our pre-drill estimated gross mean resources of over three trillion cubic feet."Nobel knows that there are legal ramifications in the US for overstating the potential for a find that could unjustifiably impact the company's stocks. Therefore the above language coming from Nobel is extraordinary and is to be taken very seriously.
Potentially, this could change the geo-strategic situation in the region as Israel moves from a technologically, highly developed country to a wealthy developed country. It could ween Israel off of US economic aid entirely, which both countries would be happy to see, although the US's economic aid is part of the leverage the US holds over Israel. That could also diminish. It could potentially change Israel's relationship with Egypt. Israel buys large quantities of natural gas from Egypt who have come to depend on Israel as a reliable costumer and source of revenue. That revenue contributes to Egypt's stability and also helps stabilize the always volatile Egyptian-Israeli relationship in general. These are only some of the effects that may not be felt for a few years as the resources are developed... but they and others will be felt. Fascinating potential development.
WSJ: Tel Aviv Stocks Up On Ceasefire, Natural Gas Discovery
Fox Israel Announces Huge Natural Gas Discovery
Reuters: large quantities of natgas off Israeli coast
Economic Times: Israel firms' stocks soar after huge gas find
Breaking: Dozens of Articles on Huge Gas find off of Israel
When Netanyahu was PM, he initiated a reduction in the economic component of the aid package. Total aid is now less than 2% of Israel's GNP. The military aid must be spent in the US, which strengthens that sector of the economy.
ReplyDeleteEgypt does currently provide gas to Israel under contract, but Egypt is trying to renegotiate the price, since market price has gone up since signing. (Islam allows abrogation of contract or treaty when one is strong enough to do so.)
It remains to be seen just how big the field is, and how recoverable.
How a family in Chicago was contaminated by an Oil Company's underground storage tanks for over ten years. Members of the family got sick, lost their home to the banks because they could not sell it, had to sell their belongings and leave to the safety of another country because their city and state politicians kept quiet and did nothing. The community's health is still at risk.
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